SCC Misses “Core” Issue in NIL/TU,O Child and Family Services Society v BC Government and Service Employees’ Union

The Supreme Court of Canada (“SCC”) has released its decision in NIL/TU,O Child and Family Services Society v BC Government and Service Employees’ Union, [2010] 2 SCR 696 [NIL/TU,O]. TheCourt.ca had first brought the British Columbia Court of Appeal case to light nearly two years ago here. In its judgment, released November 4, the SCC re-visited the test for establishing the proper jurisdiction of labour relations on federalism grounds. On one hand, the Government of British Columbia and Service Employees’ Union (“BCGEU”) maintained that Canadian courts had traditionally recognized labour relations as a predominantly provincial matter. The NIL/TU,O Child and Family Services Society (“CFSS”), on the other hand, argued that the nature of its services – specifically their serving of First Nations families – triggered federal jurisdiction over “Indians” under s. 91(24) of the Constitution Act, 1867.

The SCC’s decision was unanimous – the labour relations of CFSS fell squarely into provincial jurisdiction. The court split on the issue of the proper description and application of the legal test. However, in my opinion, the decision on the federalism issue itself was definitive and the two contrasting sets of reasons, though perhaps important to the Court, are more perplexing than illuminating. As a result, I suspect that lower courts, when faced with a similar issue in the future, will likely attempt to delineate some middle ground test that balances the analyses of both camps. To the rest of us onlookers, the majority and minority in this case merely resembled, what was that sophisticated quotation from Iron Man 2…”two seals fighting over a grape.”

Provincial delegation, provincial regulation, provincial operation…provincial jurisdiction

The facts of this case were simple. CFSS is a child welfare agency incorporated by seven First Nations groups under the British Columbian Society Act, RSBC 1996, c 433. In 2005, BCGEU applied to be certified as the bargaining agent for the employees of CFSS, a move opposed by the agency, which argued that its labour relations fell under federal jurisdiction. Section 91(24) of the Constitution Act, 1867 grants the federal government exclusive jurisdiction over matters coming within

24. Indians, and Lands reserved for the Indians.

The British Columbia Labour Relations Board granted BCGEU’s application and dismissed CFSS’s request for reconsideration. The Supreme Court of British Columbia decided the issue in CFSS’s favour, but this decision was also reversed by the British Columbia Court of Appeal. CFSS then appealed to the SCC.

The SCC unanimously dismissed the appeal. In spite of the divided analysis, there were a number of points both the majority and minority agreed upon. They asserted that CFSS’s main function was to provide child welfare services subject to British Columbia’s Child, Family and Community Service Act, RSBC 1996, c 46. CFSS was authorized and regulated entirely by provincial legislation and provincial officials. Although the organization received some federal funding, the federal government had, in a 2004 tripartite agreement, granted the funding of child welfare services on reserves on the basis that these organizations would be subject to provincial law. More importantly, the fact that the services were culturally tailored to the needs of Aboriginal families did not transform them into a federal matter. Writing for the majority, Justice Abella stated,

Neither the cultural identity of NIL/TU,O’s clients and employees, nor its mandate to provide culturally-appropriate services to Aboriginal clients, displaces the operating presumption that labour relations are provincially regulated.

Majority: Labour relations trigger a conditional two-step test, not IJI. Aboriginal status is irrelevant to this analysis.

Here is where things get tricky. In her judgment for the majority, Justice Abella insisted that the “functional test” Canadian courts had developed to determine the jurisdiction of labour relations entailed first undertaking one distinct question, looking to

examine the nature, operations and habitual activities of the entity to see if it is a federal undertaking.

A second question – “whether provincial regulation of the entity’s labour relations would impair the core of the federal head of power at issue” – would only be triggered if the functional test were inconclusive. According to Justice Abella, immediately scrutinizing whether an activity lay at the “core” of a federal undertaking would transform this functional test into a test of interjurisdictional immunity (“IJI”). The IJI doctrine had typically been applied by the courts to protect certain legislated matters that fell specifically within the federal jurisdiction, including, ironically, Aboriginal peoples (see Justice Binnie’s obiter in Canadian Western Bank v Alberta, [2007] 2 SCR 3, para 40).

Nonetheless, Justice Abella insisted not only that the functional test remain distinct but also that s. 91(24) did not require a different approach merely because the subject matter concerned Aboriginal peoples. Accordingly, she found that the “nature, operations and habitual activities” of CFSS were clearly provincial undertakings.

Minority: The “special” two-step test is really just one test. This case is about the distinct status granted to “Indians.”

Chief Justice McLachlin and Justice Fish (joined by Justice Binnie), on the other hand, interpreted the two-step functional test as an expression of one basic question,

whether the operation, viewed functionally in terms of its normal and habitual activities, falls within the core of a federal head of power.

They wrote that whether an entity’s “normal or habitual activities” constituted a federal undertaking was really a question of whether they “implicated the protected core of a federal head of power.” In this case, the two judges asked whether CFSS, viewed functionally in terms of its normal and habitual activities, fell within the core of s. 91(24).

To determine whether the “core” of s. 91(24) was implicated, the two judges imported a type of “status test” to hold that

to oust provincial labour law, the activity or operation must go to the status and rights of Indians. It must be ‘at the centre of what they do and what they are.’

In agreeing with Justice Abella, the minority wrote that the nature and habitual activities of CFSS did not implicate s. 91(24) merely because an “incidental effect” of its services was an effort to preserve the culture and identity of Aboriginal children. The nature of its child welfare services still constituted a provincially regulated operation.

Getting to the “core” of the issue

Although both versions of the functional test are equally perplexing, I prefer the minority’s analysis simply because it struck at the heart of the matter in this case. Although the case bore, at face, a division of powers issue, the simultaneous release of NIL/TU,O‘s twin decision, Communications, Energy and Paperworkers Union of Canada v Native Child and Family Services of Toronto, [2010] 2 SCR 737, (in which Native Child Services argued that its labour relations fell within exclusive provincial authority) shows that these cases were about the discomfort First Nations family agencies experienced with the idea of having provincial or federal union representation. These cases dealt with the agencies’ distinct (or, according to the Court, now not-so-distinct) role as Aboriginal family service providers. Although the majority sought to segregate the special status of Aboriginal peoples preserved in s. 91(24) from the functional test, the minority understood and confronted its pivotal role in these two cases.

The problem with the minority’s test is that it is too abstract, particularly in dealing with operations that are “intimately bound up with the status and rights of Indians.” The minority dismisses CFSS’s culturally-sensitive services by labeling them as an “incidental effect” rather than the function of the agency itself. I would think, however, that an equally strong argument could be made that the a vital aspect of these services is the preservation of Aboriginal culture and identity, while providing a universal service. The culturally-tailored services are the essence of what distinguishes CFSS from other family services agencies.

Nonetheless, the majority’s analysis, though purporting to be more clearly delineated, also falls short of escaping ambiguity. It maintains that the functional test is unique, that it ought not to implicate the IJI doctrine, but then strangely embarks on a brief discussion of co-operative federalism and the benefit of a “co-operative approach” in the “overlap between the exercise of federal and provincial competencies.” The place of co-operative federalism in this case is puzzling to me, particularly as the case does not involve two competing pieces of legislation, and the obiter naturally implies that some aspect of s. 91(24) is indeed implicated in CFSS’s situation. Furthermore, the majority is so intent on asserting that the “core” of Indian status in s. 91(24) is irrelevant to this analysis that it neglects to describe what might constitute a “federal undertaking” at all, particularly in this case. Instead, its reasoning focuses purely on the provincial aspect of CFSS’s activities.

In the end, the differences between the two sets of reasoning are nuanced and, in the big picture, perhaps even inconsequential. Lower courts that confront this issue in the future will likely have to extract portions from both the majority and minority to piece together a workable test that satisfies both camps. My own greatest worry after reading this decision is that the majority’s fixation on distilling a perfect, two-step conditional test resulted in a final analysis that became disengaged with the facts and core issue of this case.